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Jim Griffin's Warner Music splash

Jim_griffin If Warner Music Group hired Jim Griffin just to provoke discussion about new business models, it's already gotten its money's worth. Portfolio.com started things off with a piece about Warner signing Griffin, a vocal critic of the major record labels' approach to file-sharing, to a three-year contract. He'll be the guy drawing up and selling Warner's plan to create the ultimate subscription-music service: for about $5 a month per subscriber, ISPs could enable their customers to download and share an unlimited number of MP3s. It's an idea Griffin has been floating for several years, and it meshes nicely with former Warner new-media guru Paul Vidich's unsuccessful campaign to include some form of free music in the price of Internet service. Among other observers, Ars Technica's Jacqui Cheng liked the idea; TechCrunch's Michael Arrington did not. No, really. TechDirt's Mike Masnick gave it a thumbs down as well.

The most colorful critique may be from Arrington, who said demanding a monthly fee from ISPs in exchange for a promise not to sue was akin to extortion. But the allegation doesn't seem to fit what's in play here. Under the Grokster decision, I think, a judge would be hard-pressed to hold an ISP liable for its customers' infringements unless it actively promoted illegal downloading. So any threat against an ISP would be an obviously empty one. And as for suing individual file-sharers, the labels are doing that already. The threat is real, even if the odds of being targeted are slim. In that sense, offering people who are defying copyright law the chance to indemnify themselves against a lawsuit for a small monthly fee would seem like a good thing.

The more apt criticism of the idea is that it's a tax on all Internet users to pay for what some of them do online. Gerd Leonhard, a music futurist and author who has advocated a similar approach, rejected the "tax" argument, saying the approach simply bundled a fair charge for music into Internet access fees. But as much as I respect Gerd and Jim, I can't help but see this as a form of income redistribution -- taking from many to compensate for the activities of (relatively) few.

It makes sense from the labels' point of view. To them, giving Internet users the chance to download permanent copies of everything would eviscerate CD sales (not that they aren't already tanking). They would expect a very large pot of money in return, and that would require collecting fees from a very broad base. But file-sharing isn't a truly mainstream activity, at least not yet. While a sizable number of people use p2p extensively, a larger number of Internet users doesn't do it at all. Giving those folks the green light to download gigabytes of music on Limewire probably wouldn't strike them as much of a benefit, even if it were a fabulous bargain for a heavy file-sharer. Similarly, most people don't spend much, if anything, on music in the typical month. Tell them they can have an unlimited quantity of tunes for $60 a year, and they'll think hard about the other things they might acquire with that money.

The fundamental disconnect for the music industry is that more people are consuming more music, but total revenues are declining. Griffin's idea is certainly one way to address that. But a more fair approach would be to find new ways to monetize online music consumption, so that only those who have an interest in the product would be dunned. A voluntary, all-you-can-download fee collected by ISPs, as the EFF has advocated, might be a piece of that, although it probably wouldn't generate enough revenue (and could have the perverse effect of leading heavy consumers to spend less on music). Another important piece would be for advertisers to subsidize the music-related activities of people who'd prefer not to pay directly for their tunes. The demand for music is there; the question is how to turn that demand into cash, not how to turn every Internet user into a patron of the arts.

The photo of Jim Griffin is courtesy of his website.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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